The shareholders’ equity section of the balance sheet of TNLSystems Inc. included the following accounts at December 31, 2017:Shareholders' Equity ($ in millions) Common stock, 300 millionshares at $1 par $ 300 Paid-in capital—excess of par 2,400 Paid-incapital—share repurchase 2 Retained earnings 2,000 Required: 1.During 2018, TNL Systems reacquired shares of its common stock andlater sold shares in two separate transactions. Prepare the entriesfor both the purchase and subsequent resale of the shares assumingthe shares are (a) retired and (b) viewed as treasury stock. A) OnFebruary 5, 2018, TNL Systems purchased 7 million shares at $12 pershare.B) On July 9, 2018, the corporation sold 3 million shares at$14 per share. C)On November 14, 2020, the corporation sold 3million shares at $9 per share. 2. Prepare the shareholders’ equitysection of TNL Systems’ balance sheet at December 31, 2020,comparing the two approaches. Assume all net income earned in2018–2020 was distributed to shareholders as cash dividends.
